A sector that has kept its cool but has been derated looks interesting to us The grocers seem to have navigated the last 6 months mostly intact - Belgium aside. We''re not out of the woods; cost inflation continues, most obviously in the direct energy hit but also through cost of goods sold. But the market assumes the worst, particularly after another profit warning from Colruyt which we don''t think is representative. We think that broad-based negativity is overdone and upgrade Ahold Delhaize and Kroger to Outperform where they join Sainsbury''s and Tesco. Earnings risk and higher multiples leaves Jeronimo and Metro as the names to avoid we think. Solving for cash flow rather than market share - a goal that is not mutually exclusive Around 70% of a food retail investment case centres on competition. Currently elevated levels of food inflation around the world suggest that, in the main, cost pressure has found its way through to the consumer. Having faced a similar shock 10 years ago, we think the outcome might have been different. But with the industry now more likely to solve for customer satisfaction and cash flow rather than market share, plus new tools such as personalised promotion, it''s been a very different story. We''re not blind to pressure from politics and cost inflation As the last link between the food industry and consumer, the food retailers are closely watched with an expectation they should do what they can for consumers. Some like Colruyt feel duty bound to keep prices low and political pressure is much more acute in Europe than the US. Given energy cost increases will land unevenly, 2023 probably won''t be a year of profit growth. But the food retailers aren''t charities and with a focus on sustainable cash flow, we believe that most will be fine. It may not be pretty, but it doesn''t have to be if you want to protect capital Our constructive stance on the UK and now US grocers is centred primarily on market discipline and cash...